All about education inflation

Why can''t banks workout education fund to help parents to meet education costs

SAJAD BAZAZ
Srinagar, Publish Date: Nov 13 2018 10:53PM | Updated Date: Nov 13 2018 10:53PM
All about education inflationRepresentational Pic

A few weeks back, I mentioned about the cost of education eating up major portion of domestic budgets. Actually, in contemporary times, when social set-up is continuously transforming fast to fall in line with modernisation, education inflation has been baffling parents. Check with any parent, you will hear tale of rising cost of education right from schooling period.

The cost of college education including professional courses is moving upwards causing worries to students as well as parents. In other words, the cost of education doubles faster than what one gets on the money parked in most fixed return financial instruments.

Generally speaking, bringing up children has always been expensive in its own way. However, it's that expense which every parents loves irrespective of their financial constraints. In older times, it was lack of awareness about the management of money in a given scenario which used to make things complicated from parents to meet the requirements of their children. Though things are different now and a lot of awareness about money matters is continuously flowing through various quarters, there are still gaps in the money managements skill of even most educated parents when it comes to meet the financial needs of their kids.

Today's parent inevitably needs to envision the costs which they need to meet during a period of about two decades to bring up their child from birth to college. I know many young parents who are conscious of the rising education inflation and have started saving for their kids. Today, in the given fierce competition even at the time of nursery admissions, education is almost unaffordable when compared to the scenario a decade ago.

We have seen that whenever parents start savings and investing with the purpose of the child’s education or future, they rarely even think of using the saved money or returns which get from the investments for any other purpose. They very rarely use it in case of emergencies.

Major challenge for parents emerge when it comes to fund higher education. The situation for parents gets more complex the moment you opt for a professional course for your child. Here the burden is additional as cost of coaching becomes inevitable. Most of the times, children opting for a particular professional course during their schooling would start pursuing a regular preparatory course. This additional preparatory course comes at a whooping cost running in lakhs of rupees. So parents are confronted with complex financial problems.

But, all this financial burden which ultimately is investment to ensure bright future of kids should not frighten a parent. They should take it like all other financial goals, which too can be achieved if planned early.

The crux of the matter is to save and for saving you need a proper planning as a parent. Here the parents have to necessarily develop saving habits. Appropriate route for saving is of utmost importance. It's also a fact that while beginning to save to fund child’s education several years ahead, you cannot figure out exact amount that you may need to fund college expenses of your kid/s. But this should not deter you from making a beginning in saving money for such future needs.

We have many variants of bank schemes where you can save your money. Even we have investment products such as systematic investment plan etc which provides opportunity to save and earn profits on the investment.  

When we talk of formal deposit and investment schemes, we find most of the times uniformity in such product. The financial institutions like banks need to develop attractive financial products which can lure parents to save exclusively for child's education. In loan segment, banks have been selling education loan product to fund education expenses of students. Why can't banks tailor a product or stream of products in deposit/ investment segment so that young parents are attracted to park their money in easy installments on long term basis. Isn't it possible to create an education fund in deposit segment where a parent can make recurring investment with a goal to bank upon at the time of need of child's education expenses?

Meanwhile, the extremely high uncontrolled education inflation makes it necessary to save and invest in appropriate financial instruments. This way the parents can ensure hassle free availability of finances for the future education needs of their children.

 

(The views are of the author and not that of the institution he works for)

 

 

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